Air Australia cancels all flights

Budget airline Air Australia has gone into voluntary administration, cancelling all flights and leaving thousands of holidaymakers stranded.

The international and domestic airline, formerly known as Strategic Airlines, grounded its five-jet fleet and put a halt to new bookings after revealing it cannot pay its bills.

Approximately 4,000 passengers are currently overseas with Air Australia on round-trip tickets, with destination as far-flung as Honolulu, Hawaii and Phuket, said voluntary administrator Mark Korda.

One unfortunate passenger is Priya Sinh, who was unable to make it home from Honolulu for her 18th birthday party on Australia's Gold Coast. She used her tablet computer to tell her 70 guests via Facebook not to come.

"We tried to laugh about it, but it wasn't funny," said Sinh. Luckily her mother was able to reserve the last four seats to Sydney with the airline Jetstar.

Voluntary administration allows companies some breathing space to trade out of their financial problems. The airline will give refunds to passengers who bought tickets with credit cards or who had
travel insurance .

A spokesperson for the airline said: "It currently appears that there are no funds available to meet operational expenses so flights will be suspended immediately."